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9.45 am
The Paymaster General (Dawn Primarolo): I support Lords amendments 1 to 3.
Clause 1 allows the Treasury to bring forward in secondary legislation regulations enabling community benefit societies to adopt a lock-in over their assets, so that their assets cannot be used or dealt with other than for the benefit of the community, except in such cases as may be prescribed in the regulations, such as insolvency.
An asset lock-in regime for community benefit societies was one of the key proposals of the strategy unit report "Private Action, Public Benefit". The Government support the principle of such a regime and can see the benefits that it could bring to community benefit societies and to the economy as a whole. However, an asset lock-in regime would require detailed work and consultation to get the policy right, and to reflect the needs of the sector and other stakeholders. That is why we support an enabling clause, rather than bringing forward a substantive asset lock-in regime in this Bill.
The Government are committed to taking forward an asset lock-in regime. To ensure that the asset lock-in regime is sufficiently robust to give societies the certainty that their assets will always be used for the community benefit, it may be necessary to appoint a body to perform supervisory or regulatory functions. The body may also need to make binding rules to help maintain compliance with the regime. For this purpose, the clause enables the Treasury, through regulation, to confer rule-making powers on a prescribed body under clause 1(5)(d).
Although any regulations made under clause 1(1) could only make provision for the purpose of setting up an asset lock-in regime for community benefit societies, the Lords Delegated Powers and Regulatory Reform Committee expressed concern that such a delegation would be appropriate only if it were to be expressly limited to a specific purpose. To address the Committee's concern, the amendments made in the other place narrow the scope of clause 1(5)(d), so that the regulations can only authorise a prescribed person to make binding rules for the purpose of enabling or assisting him to perform his functions under the regulations. That expression is not new in the Lords amendment: it was already in the provision in the form in which it left the Commons. All that the amendments do is narrow the rule-making power from the wider version in the previous Bill. "Prescribed" is defined as meaning prescribed by regulations. Thus, the amendments made explicit that any rule-making powers conferred on a supervisory body will be directly related to the implementation of the asset lock-in regime.
Lords Amendments Nos. 1 and 3 made further minor amendments for the purpose of consistency with Lords amendment No. 2. Lords amendment No. 2 uses the phrase "enabling or assisting" whereas clause 1(4)(h) as it left the Commons merely used the word "enable". Lords amendment No. 1 alters this to "enable or assist" for the reasons that I have given to the House in terms of making explicit the provisions of the Bill. Lords amendment No. 2 alters clause (1)(5)(d) so that it uses the phrase
- "to perform any of his functions",
- "carrying out any of his functions".
Mr. Randall: Lords amendment No. 2 contains the word "perform", so I presume that amendment No. 3 echoes that with its use of the word "performing". Can the Paymaster General enlighten me about whether there is any difference in meaning between "performing" and "carrying out"? Would it have been possible to use the words "to carry out" in amendment No. 2 or is there a legal difference between the two terms?
Dawn Primarolo: I understand that there is no legal difference. The hon. Gentleman is right in the sense that alternative words could have been used. The changes have been made to ensure consistency of terminology between Lords amendment No. 2 and the other provisions in clause 1. The other place decided that it preferred a narrowing of powers on the specifics that the Bill addresses, and the other amendments are about consistency of terminology. That is always desirable to help people when they read such a Bill. The Government are happy to support the amendments.
Mr. Todd: My right hon. Friend has provided an extremely elegant explanation of some of the textual issues. That responds to some of the points made about the precise choice of words.
If we dwell for a moment on the broader context of the clause and the reasons for this narrowing amendment, we realise the asset-locking provision, which is a key part of the Bill, is designed not to restrict the rights of certain citizens but to facilitate the ability of citizens who form themselves into community benefit societies to protect that particular asset so that it can do the purpose for which it was originally set up. The provision is not designed to restrict individual freedoms. As I explained on Second Reading, I deliberately chose this Bill as I was seeking one that would not restrict individual freedoms but would facilitate the means by which people could co-operate safely and in a manner that protected the purpose for which they established their venture.
It is also important to emphasise that there will be a lengthy consultation process on exactly how the regulations will be drawn up. The clause facilitates that process, so there will be many opportunities for
Members of the House and those who are directly interested in the regulatory framework for community benefit societies to comment on the process and on the regulations that any Government might choose to lay before the House. Decisions on regulations will be determined by an affirmative vote in the House, and that will give Members a further opportunity to debate them in more detail should they wish to do so.I am grateful for the comments of the hon. Member for Christchurch (Mr. Chope). The other place performed a service in identifying the potential to narrow a little further and sharpen the purposes of the clause. I commend the amendments to the House.
Lords amendments Nos. 2 and 3 agreed to.
Lords amendment: No. 4, in page 2, line 38, at end insert—
- "( ) Regulations under this section may not create any new criminal offence punishable with imprisonment for more than seven years."
The purpose of this amendment is perhaps more explicit than that of the first group. It illustrates the concern of the Delegated Powers and Regulatory Reform Committee about what might stem from the clause should the Government proceed to consult on and publish any regulations. Those regulations would, in certain circumstances, impose penalties on those who are in breach of them. I raised questions on this issue earlier in our proceedings on the Bill, and I can certainly sympathise with the view taken in the other place that there should be a clear restriction on the penalties that could be imposed under the clause. The amendment, therefore, readily commends itself to the House.
Mr. Chope: I am grateful to the hon. Gentleman for the way in which he moved the amendment, but he has failed to explain why he thinks that seven years is reasonable. The justification that Lord Carter gave in the other place for having seven years as the maximum term for imprisonment was that, once the Bill is enacted, it will be possible for offences to be committed that are tantamount to fraud or theft. Therefore, the maximum penalty should be commensurate with the gravity of an offence of fraud or theft. However, an offence of fraud or theft already carries a maximum penalty far in excess of seven years. An officer or member of a co-operative or community benefit society who is guilty of theft or fraud should surely be prosecuted under the provisions of the Theft Acts and be exposed to the maximum penalties stipulated in that legislation. The justification for this delegated regulatory power, which would give the Government the power to introduce a maximum penalty of seven years for offences that might be quite trivial, is slightly specious.
Mr. Forth: Is my hon. Friend prepared to go a stage further? The people who could be defrauded are members of co-operatives and community benefit societies and, I think it is fair to say, they are usually some of the weaker and more vulnerable members of
society. Therefore, if anything, we should give them even more protection. It is bad enough for people to defraud large corporations, but to take advantage of the people covered by the Bill would surely be even worse. Is there not an argument for strengthening rather than weakening the provisions?
Mr. Chope: I take my right hon. Friend's point. My concern is that, by specifying a maximum of seven years for offences that are tantamount to fraud or theft, a reasonable person—perhaps a member of a co-operative or community benefit society—might ask why Parliament and the Government think that theft and fraud from such a society's funds is a less serious offence than theft or fraud from an organisation in the public or private sector. Lord Carter's justification for the seven-year maximum could send a confused message to those outside who might think that we do not take seriously fraud or theft in relation to co-operative or community benefit societies.
Lord Carter was probably seeking to accept the detailed recommendation of the Delegated Powers and Regulatory Reform Committee. Before the amendment was tabled, it was concerned that the Bill contained powers to make regulations creating new criminal offences without specifying the maximum penalties for those offences. On 13 June, the noble Lord seemed to be reluctant to accept the Committee's recommendation. He said that
- "there are precedents for a power to create criminal offences in secondary legislation that do not specify a limit"—[Official Report, House of Lords, 13 June 2003; Vol. 649, c. 502.]
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